A new potential source for MSME development

Japan and ASEAN have close economic connections, but what I experienced during my recent engagements in Japan as chair of the ASEAN Business Advisory Council brought home some realizations on how our close neighbor has impacted the Philippines, in almost all aspects of life.

Of course, there are the Japanophiles among Filipinos, and who could blame them? The food, the culture, the efficiency and many other things about the country are really to be admired. As an advocate for MSME development in the Philippines and working in my capacity as part of the ASEAN-BAC, I see that the conversation with Japan can be so much more. Beyond trade, investment, and high-level themes of regional cooperation, we can ask a sharper question: one about investments in the primary drivers of our country’s economy – MSMEs.

Now more than ever, the world’s largest economies are looking for places where capital can be placed with confidence, continuity and real value creation. In other words, capital is actively looking for places to “park” and deploy its resources, not just for short-term returns, but for longer-term productive growth.

When markets become more uncertain, capital does what it always does: it seeks environments that can reduce risk. For Japanese companies – many of whom are deliberate, relationship-driven and long-horizon oriented – this search often becomes a search for reliable ecosystems that have stable supply networks, trustworthy partners and business environments where enterprise development can be sustained rather than disrupted.

For the Philippines, this moment could become an opportunity or a strategic advantage. However, investments that come without local linkages in place can benefit only a few big players and leave small businesses on the margins. When capital moves, it does not automatically create broad-based employment. That is why, from the MSME advocate’s perspective, the most important question is not simply “Will we attract investments?” but “Will investments connect to Filipino MSMEs in ways that let them grow and create more jobs?”

The Philippines has a huge MSME base. In many communities across the Philippines, MSMEs are the engine of everyday livelihoods. They employ people in places and situations where regular employment would have been difficult. Yet too many Filipino enterprises remain stuck at the micro scale due to limitations in things like market access, procurement readiness, financing, logistics, standards compliance and managerial capability. As a result, MSMEs are not guaranteed to scale – even if they had the talent and grit. This is even more true for medium enterprises, as they are in that awkward stage where they are not small enough to attract attention for assistance and have increasingly complicated needs that require more specialized assistance.

One segment that proved how accessible capital made all the difference is in the gig economy, specifically, the ones involving motorcycles. The explosion in the number of motorcycles on the roads today can be attributed to how easily people can acquire them, often through easy loans. As a result, we saw an increase in nanoentrepreneurs like ride-hailing and delivery riders. Even small businesses benefited as they now had the means to transport goods or service workers.

The beauty in this development is that MSME development came not as charity, but as an economic infrastructure that took on a life of its own; in short, it became sustainable.

When I and my team from the ASEAN-BAC Philippines conducted our Japan roadshow last May, we saw how Japan’s approach to economic resilience is grounded in capability-building. Japanese institutions are not satisfied with simply launching programs; they emphasize structured mentorship, practical learning and collaboration models that help enterprises grow into the next level of maturity.

This matters because MSME development works best when it follows an intentional path: when they gain capabilities to survive market pressures, the capacity to fulfill commercial requirements and gain the necessary mechanisms to scale.

And if Japanese capital seeks reliability, it should encounter reliable partners in the Philippines, especially with MSMEs that just need the three Ms to succeed: markets, mentoring and money, or capital. In short, capital alone is not enough.

If shifting Japanese capital will become a bigger reality, the Philippines must become more than a destination, but a system that converts investment into jobs. Components such as supplier development and procurement readiness, capability upgrades tied to real markets, structured mentorship and long-term collaboration, financing that matches enterprise graduation and support for resilient and value-driven sectors.

When these elements are in place, capital repositioning becomes a benefit to the wider economy. Instead of capital simply flowing “through” the country, it flows “into” the productive base of MSMEs, and we can build resilience and inclusion together.

Japan’s partnership has historically been valued for the investment, technology and cooperation it brings. But from the Philippines’ perspective, the next phase should be judged by another metric: does it broaden economic participation? Does it strengthen MSMEs so they can employ more Filipinos, support local suppliers and contribute to productivity growth?

If Japanese capital is looking for steadier, more dependable deployment amid unpredictability elsewhere, then the Philippines can position itself as that steady, dependable environment, with an MSME-centered plan.

The Philippines must make the case that we can offer both stability and enterprise growth. We can provide the demand-side signals (public and private procurement opportunities, investment in standards and logistics readiness) and the supply-side capabilities (mentorship, supplier development, financing and market access support).

Let our partnerships with other countries be measured by how many Filipino MSMEs they strengthen – and how many jobs they create. If we can do that, then shifting capital interest will not remain a transient headline but instead a lasting engine of Philippine employment, innovation, and inclusive prosperity.

Uncertainty can become an opportunity for MSME scaling, ensuring that when capital seeks places to grow despite unpredictability, it finds the Philippines ready – not just to host investment, but to transform it into jobs and enterprise expansion.